The closure of beneficiary and pool accounts by the investor and the clearing member or at thediscretion of the participant, if the client has defaulted in its obligations towards the participant.

Accounts Payable

A current liability showing the amounts due to others within a period of one year when such liabilityresulted from the purchase or manufacturing of inventory.

Accounts Receivable

Any money due to a business for merchandise or securities that it has sold or for services it hasrendered. This is a key determinant in analyzing a company’s liquidity.

Accreting

A description applicable to a range of instruments, e.g. caps, swaps, collars and swaptions, where thenotional amount on which the instrument is based increases successively during its life.

Accrued Interest

The interest accruing on a security since the previous coupon date. If a security is sold between twopayment dates, the buyer usually compensates the seller for the interest accrued, either within theprice or as a separate payment.

Acid Test Ratio

The value of cash equivalents and accounts receivable (the quick assets) divided by current liabilities.Also known as quick asset ratio or liquidity ratio, it is a measurement of corporate liquidity.

Acquirer

Any individual/company/any other legal entity, which intends to acquire or acquires substantial quantityof shares or voting rights of target company or acquires or agrees to acquire control over the targetcompany along with the persons acting in concert.

Active portfolio Strategy

A strategy that uses available information and forecasting techniques to seek a better performancethan a portfolio that is simply diversified broadly.

Adhoc Margin

Margin collected by the Stock Exchange from the members having unduly large outstanding positionor the margin levied on volatile scrips based on adhoc basis keeping in view the risk perspective.

Adjustable Peg

Term for an exchange rate regime where a country’s exchange rate is pegged (i.e. fixed) in relation toanother currency (normally the dollar), but where the rate may be changed from time to time.

2

Adjusted beta

The estimation of a security’s future beta, which is derived from historical date, but is modified assumingthat the security’s real beta has tendency to move towards the market average of one.

Admission to Dealing

The process of granting permission to the securities of a company to be listed in a Stock Exchangeand to provide trading facilities for the securities in the market.

Advance/Decline line

A technical analysis tool representing the total of differences between advances and declines of securityprices. The advance/decline line is considered the best indicator of market movement as a whole.Stock indices such as Dow-Jones Industrial Average only tell us the strength of 30 stocks where asthe Advance/Decline line provides much more insight.

Adviser

A financial planner or financial intermediary who offers advice on personal financial matters. Advisersmay be paid an upfront or an ongoing commission for the investments that they recommend.

Agency Orders

Orders that a broker dealer executes for the account of a customer with another professional or retail investor.

Allotment Advice

A letter sent to the successful applicant by the company stating allotment of shares or debentures orother securities against his application. The advice is not negotiable in the market.

Allotment Letter

Document of title issued to investors by companies stating allotment of shares/debentures /othersecurities to applicants subscribing for such securities or in pursuance of certain contracts enteredinto in that behalf. These letters are negotiable in the market.

Alpha

In a Jensen Index, a factor to represent the portfolio’s performance that diverges from its beta,representing a measure of the manager’s performance.

AMBI-

Association of Merchant Bankers in India

American Depository Receipts (ADR) (U.S.)

A certificate issued in the United States in lieu of a foreign security. The original securities are lodgedin Bank/Custodian abroad, and the American Depository Receipts (ADRs) are traded in the US for allintents and purposes as if they were a domestic stock. An ADR dividend is paid in US dollars, so itprovides a way for American investors to buy foreign securities without having to go abroad, andwithout having to switch in and out of foreign currencies.

American Option

A put or call that can be exercised at any time prior to expiration. Most listed stock options, includingthose on European exchanges are US style options. Important exceptions are certain low strike price

3options and options on shares with restricted transferability. Most listed options on other instrumentsare also US-style options, but a number of European style options have been introduced in recentyears, particularly on stock indices and currencies.

AMFI-

Association of Mutual Funds in India

Analyst

A firm / company / an individual who is engaged either on his own behalf or on behalf of any otherfirm or organization that is regularly publishing securities recommendations based on research eitherthrough print media and /or electronic media.

Appreciation

A rise in the price of a security or in the value of one currency in terms of another.

Approved intermediary

A person duly registered by the SEBI Board under the Securities Lending Scheme , 1997 throughwhom the lender of securities will deposit the securities and the borrower will borrow the securities.

Arbitrage

(1)Technically, arbitrage consists of purchasing a commodity or security in one market for immediatesale in another market (deterministic arbitrage).(2)Popular usage has expanded the meaning of the term to include any activity which attempts tobuy a relatively underpriced item and sell a similar, relatively overpriced item, expecting to profitwhen the prices resume a more appropriate theoretical or historical relationship (statisticalarbitrage).(3)In trading options, convertible securities, and futures, arbitrage techniques can be applied whenevera strategy involves buying and selling packages of related instruments.(4)Risk arbitrage applies the principles of risk offset to mergers and other major corporatedevelopments. The risk offsetting position(s) do not insulate the investor from certain event risks(such as termination of a merger agreement on the risk of completion of a transaction within acertain time) so that the arbitrage is incomplete.(5)Tax arbitrage transactions are undertaken to share the benefit of differential tax rates orcircumstances of two or more parties to a transaction.(6)Regulatory arbitrage transactions are designed to provide indirect access to a risk managementmarket where one party is denied direct access by law or regulation.(7)Swap driven arbitrage transactions are motivated by the comparative advantages which swapcounter-parties enjoy in different debt and currency markets. One counterparty may borrow at arelatively lower rate in the intermediate or long term United States dollar market, while the othermay have a comparative advantage in floating rate sterling.

Arbitration

An alternative dispute resolution mechanism provided by a stock exchange for resolving disputesbetween the trading members and their clients in respect of trades done on the exchange.